MOSL: ENTERTAINMENT NETWORK INDIA (Buy)-Operating leverage of core business to drive earnings growth
Entertainment Network India: Operating leverage of core business to drive earnings growth
(ENIL IN, Mkt Cap USD0.3b, CMP INR484, TP INR596, 23% Upside, Buy)
- Solution business drives growth: Standalone revenue at INR1,755m grew a healthy 10% YoY (6% miss), though it was primarily led by strong uptick in the Solutions business. Core radio revenue remained flat at about INR1,000m (as indicated by management). EBITDA grew 24% YoY to INR437m (in-line); margins expanded 270bp to 24.9% on healthy revenue growth and inherent operating leverage. A key positive surprise was EBITDA margin of Batch 1 stations, which came in at 34% (v/s 10.6% YoY). This, coupled with higher net finance income led to 69% YoY surge in PAT to INR198m (in-line). For FY19, revenue/EBITDA/adj. PAT grew 16%/20%/60% YoY.
- Concall highlights: (1) Expect 15% overall revenue growth and 20-25% EBITDA growth in FY20. (2) Core radio business is expected to grow 8-10%. (3) Solutions business to witness faster rate of growth than the radio business. (4) FY20 capex guidance stands at INR100m.
Entertainment Network (India) Limited is engaged in private frequency modulation (FM) radio broadcasting. The Company's principal revenue stream is advertising. The Company's advertising business includes the sale of air time in its Frequency Modulation (FM) radio broadcasting stations, activations and monetization of its media properties. The Company operates through Media and Entertainment segment. The Company operates in radio broadcasting under the brand Radio Mirchi, which is a radio station. The Company has operations in Jammu, Chandigarh, Srinagar, Ahmedabad, Hyderabad, Panaji, Bengaluru, Kolkata, Guwahati, Raipur, Kozhikode, Nashik, Kanpur, Visakhapatnam, Surat, Vijayawada, Nagpur, Shillong, Vadodara, Thiruvananthapuram, Rajkot, Patna, Coimbatore, Madurai, Kolhapur, Indore, Delhi, Jalandhar, Jabalpur, Shimla, Jodhpur, Patiala, Amritsar and Bengaluru, among others. Mirchi is also on television through properties, such as Mirchi Music Awards, Mirchi Top 20 and Spell Bee.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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